Reaction to bid amounts: 'I don't know if we can make our way through this'

Thursday, July 1, 2010

HME providers last week were critical of the low-ball or "suicide" bidders that they say are largely responsible for driving down Medicare reimbursement, on average, 32% as part of Round 1.2 of competitive bidding.

"Once again CMS has given the industry enough rope to hang ourselves and we have willingly complied," said Mike Kuller, president of Allstar Oxygen Services in Concord, Calif., part of a Round 2 bid area.

Average reimbursement cuts for the nine product categories that CMS put out to bid in nine bid areas ranged from 14% for complex power wheelchairs (Group 2) to 56% for mail-order diabetic supplies.

Several providers who received contract offers last week say the winning bid amounts are drastically lower than the amounts they submitted, leading them to believe that low-ball bidders skewed the process.

"Who submitted these bids and why didn't CMS make sure this didn't occur?" asked Gerald Sloan, owner and CEO of Progressive Medical Equipment in Lenexa, Kan., a Round 1.2 bid area.

If everyone had done appropriate due diligence, the bid amounts wouldn't be as low as they are, providers say.

"I'm scratching my head, because we looked at our pricing and operations in every different way possible," said John Reed, executive vice president and COO of Pro2 Respiratory Services in Cincinnati, a Round 1.2 bid area. "Do providers have no idea of their costs? Show me the business that can thrive in this environment without violating Medicare requirements."

Despite the steep cut, providers say they expect offers to be accepted--there's no other way.

"Our building's on fire and we're standing on a ledge: Do we jump and die immediately or burn slowly and hope someone saves us?" Reed said.

But it certainly won't be business as usual, providers say.

"There are going to be changes," said Carl Wallman, president of Galaxy Medical in Fort Lauderdale, Fla., a Round 1.2 bid area. "We'll no longer be able to give the hospitals, the docs, the patients whatever they want. Our RTs will no longer be able to spend hours with patients. We'll still send them out, but it's going to be a much quicker visit."

Providers will also try to make up in volume what they lose in reimbursement, something they acknowledge will be an uphill battle.

"We're going to have to, basically, sell twice as many power wheelchairs to stay even," said Rick Perrotta, president of Network Medical Supply in Charlotte, N.C., a Round 1.2 bid area. "We reinvented ourselves after a 26% cut in 2006, we tightened our belts after a 9.5% cut last year and now with this cut--unless more business falls into our laps that we don't have to pay expensive ads for--I don't know if we can make our way through this."